A Higher Regional Court in Germany has ruled that file-hosting service RapidShare operates legally in Germany. The verdict is the result of a long-standing legal battle between the Swiss-based file-hosting service and music rights group GEMA. It's not all good for RapidShare though, as the company now has to monitor external websites for incoming links to infringing files.

In the aftermath of the Megaupload shutdown, people have been keeping a close eye on court cases involving other file-hosting services, RapidShare included.

During the past several years RapidShare has made tremendous efforts to cooperate with copyright holders and limit copyright infringements. But this couldn’t prevent the company from getting involved in a handful of lawsuits against rightsholders.

Two week ago, a press release published by copyright holders claimed that RapidShare had suffered an enormous defeat in court. However, now that the court has published its final decision, RapidShare is claiming a victory of its own.

In the verdict of RapidShare’s legal dispute against the music rights group GEMA, the Higher Regional Court in Hamburg explicitly recognizes that RapidShare’s business model is legal. This news is music to the ears of the file-hoster.

“For the first time the Hamburg Higher Regional Court has followed our line of argument on key points and has conferred legal legitimacy on our service, just as other courts have done over a considerable period of time. This is a significant result for us,” said RapidShare CEO Alexandra Zwingli.

The court further ruled that RapidShare has no obligation to proactively monitor files that are uploaded by its users. Instead, the company has to monitor external sites that link to copyrighted files on RapidShare, and ensure these files become inaccessible.

This is not a problem according to the cyberlocker.

“That is exactly what RapidShare has already been doing for many years. If the Anti-Abuse Team identifies a download link on such pages which results in a file that has clearly been published illegally being on the company’s servers, the file in question is immediately blocked.”

Aside from monitoring forums and linking sites for infringing links, RapidShare has made several other adjustments to its service to decrease unlawful use. Most recently, the company limited the download speeds of “free” users to drive away pirates.

Nevertheless, RapidShare objects to the fact that they have to carry out this monitoring based on a court order, and they will therefore take the case to the Supreme Court.

“We are doing this of our own accord because we have a strong interest in ensuring that our service remains clean. We believe that being obliged to carry out such actions is questionable from a legal perspective. For this reason we will appeal the verdict to clarify the issue of proactive monitoring of external websites at the highest judicial level,” Zwingli said.

The eventual decision of the Supreme Court may have massive implications. Not only for RapidShare, but also for the many other file-hosting services that operate in Germany.